Driving Forces of Venture Capital Investments in Europe: A Dynamic Panel Data Analysis (download PDF 178 Kb)

Andrea Schertler

Abstract
Using dynamic panel estimations, this paper identifies driving forces of venture capital activity for Western European countries. Driving forces might be the liquidity of stock markets, human capital endowment, and labour market rigidities. I find that these factors do not affect expansion stage investments used as a broader definition of venture capital, while they positively affect early stage investments used as a narrow definition. Thus, the results suggest not only that liquid stock markets play an important role for the development of venture capital markets but also that they are not the only factor that drives venture capital activity.

Keywords: venture capital investments, Europe, dynamic panel

JEL classification: G24, G32